Bitcoin, after reaching an ETF-induced peak of $48,500 on January 11, has witnessed an 11.5% retreat, a move largely anticipated by analysts. However, recent signals indicate that a more substantial market correction could be on the horizon.
Analysis of Bitcoin Correction Chances
On January 15, CryptoQuant, an on-chain analytics provider, highlighted the Bitcoin Korea Premium Positive and the Coinbase Premium Negative as indicators pointing towards a potential short-term correction. According to their analysis, when the Korea Premium surpasses a 3% overheating threshold and the Coinbase Premium turns negative, it signifies a scenario where U.S. investors are selling while South Korean investors are competitively buying Bitcoin.
Historical data presented by CryptoQuant suggests that such premium divergences have historically signaled short-term corrections within a bull market, with the potential to mark the beginning of a bear market at its peak. However, the current market context, characterized by a recovery or bull rally phase, suggests that a short-term correction is more probable.
The analysts noted that there have been three consecutive signals since mid-December. In a late December report by BeInCrypto, it was highlighted that the Kimchi premium signaled a potential local market top. Despite Bitcoin’s attempts to breach resistance levels above $47,000, it has faced challenges.
Additional contributing factors to the potential correction include increased deposits into Bitcoin exchanges by whale investors and miners. Moreover, the selling of shares in the Grayscale Bitcoin Trust is seen as a factor that may lead to a pullback and sideways movement in the short term, rather than a price increase.
A previous report on January 15 from BeInCrypto suggested the possibility of a substantial leverage flush on derivatives exchanges like Binance, potentially resulting in a 20-30% correction and pushing Bitcoin prices below $40,000.
Current BTC Price Outlook
As of the latest update, Bitcoin is trading flat at $42,843. Following a weekend decline to this level, BTC has remained relatively stable. Despite a brief surge above $43,000 on January 15, sustained upward momentum has proven unsustainable.
Aside from a momentary spike driven by ETF approval news, Bitcoin has been exhibiting sideways movement since the beginning of December. The $37,000 price zone is identified as a crucial support level, and if a correction materializes, it could represent a 24% downturn.
As the market navigates these potential indicators, investors are closely monitoring developments that could shape Bitcoin’s short-term trajectory.
